Nova Scotia — New details on venture capital tax credit

Nova Scotia — New details on venture capital tax credit

Eligible investors may be able to claim the 15% tax credit on an eligible investment

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Nova Scotia has provided new details on its non-refundable 15% venture capital tax credit. These details, which were included in new regulations released on November 17, 2020, outline the criteria for various aspects of the credit including:

  • Eligible investments
  • Eligible investors
  • Qualifying venture capital funds

Background

The venture capital tax credit allows eligible corporations and individuals who invest in a qualifying venture capital fund to claim a non-refundable 15% income tax credit on qualifying investments made after March 31, 2019 and before April 1, 2024. This credit was first introduced in Nova Scotia's 2019 budget.

Claiming the credit

Eligible investors can claim the 15% non-refundable tax credit on a maximum eligible investment of $500,000, according to the new regulations. Any unclaimed credit can be carried forward seven years or back three years, to a taxation year ended on or after April 1, 2019.

Eligibility criteria

To claim the credit, investors must generally be either an individual resident of Nova Scotia (at least 19 years old) or a taxable Canadian corporation with a head office in Nova Scotia, and must have received the appropriate tax-credit certificate from the province. The regulations also provide that an eligible investor is subject to a four-year holding period.

To be considered a qualifying venture capital fund, a corporation or limited partnership must meet several conditions, including that its head office must be in Nova Scotia and it must have equity capital of at least $25,000. A qualifying venture capital fund must also use funds raised through an authorized equity capital raise to make qualifying small business investments and meet certain approval and certification requirements.

For more information, contact your KPMG advisor.

Information is current to December 1, 2020. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

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